nep-tra New Economics Papers
on Transition Economics
Issue of 2010‒01‒10
sixteen papers chosen by
J. David Brown
Heriot-Watt University

  1. The Effect of Direct Foreign Investment on Domestic Firms: Evidence from Firm Level Panel Data in Emerging Economies By Jozef Konings
  2. Future Population Trends in China: 2005-2050 By Chen Wei; Liu Jinju
  3. The Economic Crisis in Russia: Fragility and Robustness of Globalisation By Satoshi Mizobata
  4. Twenty years of land reforms in Central and Eastern Europe: state of play and outlook By Céline Bignebat; Laure Latruffe
  5. Eastern Europe and the former Soviet Union since the fall of the Berlin Wall: Review of the changes in the environment and natural resources By Markandya, Anil; Chou, Wan Jung
  6. The regional development of science and innovation in China: a brief review of current evidence on matches and mismatches By Kroll, Henning
  7. Exchange Rate Pass-through in Central and Eastern European Member States. By John Beirne; Martin Bijsterbosch
  8. Child well-being in Eastern Europe and Central Asia: a multidimensional approach By Sheila Marnie; Leonardo Menchini; Luca Tiberti
  9. Public Health in Europe: The 2007-2009 Financial Crisis and UNECE Activities By Robert Shelburne; Claudia Trentini
  11. Euroization in Central, Eastern and Southeastern Europe – New Evidence On Its Extent and Some Evidence On Its Causes. By Thomas Scheiber; Helmut Stix
  12. Will an Appreciation of the Renminbi Rebalance the Global Economy? A Dynamic Financial CGE Analysis By Jingliang Xiao; Glyn Wittwer
  13. The evolution of the Sino-American Co-dependency: modelling a regime switch in a growth setting By Luigi Bonatti; Andrea Fracasso
  14. What Happened to the East German Housing Market? – A Historical Perspective on the Role of Public Funding – By Claus Michelsen; Dominik Weiß
  15. Historical family systems and the great European divide: the invention of the Slavic East By Mikolaj Szoltysek; Barbara Zuber Goldstein
  16. The Belarusian Case of Transition: Whither Financial Repression? By Korosteleva, J; Lawson, Colin

  1. By: Jozef Konings
    Abstract: This paper uses firm level panel data to investigate empirically the effects of direct foreign investment (DFI) on the productivity performance of domestic firms in three emerging economies of Central and Eastern Europe, Bulgaria, Romania and Poland. To this end a unique firm level panel data set is used with detailed information on foreign ownership at the firm level.
    Keywords: foreign investment, Bulgaria, Romania, poland, state sector, policy, invest, production, Foreign firms, technological, domestic firms, foreign investors, productivity, domestic firms, panel data, Econometric, employees, emerging economies, central europe, eastern europe, bulgaria, romania, poland, data set, foreign ownership, firm level, Spillovers, Absorptive Capacity, Emerging countries,
    Date: 2009
  2. By: Chen Wei; Liu Jinju
    Abstract: Using China's 2000 census data, this paper conducts population projection under different fertility scenarios to gauge the likely trends in China's future population change. The range of fertility assumptions captures the uncertainty of current fertility estimates as well as the likely trends under the family planning policy and economic development. Only one mortality scenario is applied and net international migration is assumed to be null in the population projection. Future life tables are generated by Brass logit techniques with initial 2000 life tables and assumed annual life expectancy at birth following the United Nations medium improvement model. China is experiencing unprecedented demographic transition together with the radical social and economic transformation. Demographically speaking China is now a developed country. However, China's future population growth is substantial, a solely result of the population momentum built into the age structure by past fertility and mortality. 10 percent or 135 million increase is expected in the next 25 years under the medium fertility scenario. China would reach a maximum population of 1443 million in 2030, followed by a long-term population decline. Two major changes of the future population age structure of China are continuing demographic dividend and rapid population ageing. China's demographic window of opportunity opened at 1990 and will close at 2033. Having a work force of around one billion has many advantages if we consider only the dependency ratio in the population or the labour supply for the development. However, China will be also experiencing a rapid population ageing after 2015. One fifth to one quarter of the Chinese population would be older people at age 65 or over after 2035. The year of 2029 would be a turning point in China's age structure transition, when for the first time in Chinese history the elderly population would exceed the child population.
    Keywords: population projection, Brass logit transformation, life table, China
    JEL: J11
    Date: 2009–09
  3. By: Satoshi Mizobata (Institute of Economic Research, Kyoto University)
    Abstract: It is now clear that the global economic crisis has hit the Russian economy. The resulting shock clearly shows not only the global economic imbalance but also the distinct characteristics of emerging Russian markets. The Russian economy already changed its structure under the high economic growth of the early to mid-2000s, and has since then become too sensitive to the global market and the oil price. However, the Russian markets involve the strong hand of the government, and the anti-crisis policy gives this hand constancy. The crisis process and the anti-crisis measures characterize the Russian market institutions. The current paper investigates the characteristics of the Russian markets under both the economic growth period and the crisis period, and offers perspective on the market transition.
    Keywords: economic crisis, oil dollar, foreign capital, government, marketisation, transition, debts
    JEL: P50 P16 F02 F34 O52
    Date: 2009–12
  4. By: Céline Bignebat; Laure Latruffe
    Abstract: The purpose of this article is to gain a perspective on the land reforms in the Central and Eastern European countries to show the extent to which the structure of agricultural production left by the socialist period has influenced the restructuring dynamics. In this context, the observed dual agricultural structure is seen as the result of a sticking point exacerbated by the agricultural transition’s land component.
    Keywords: transition, land reforms, property rights, initial situation
    JEL: Q15 D23 P32
    Date: 2009
  5. By: Markandya, Anil; Chou, Wan Jung
    Abstract: This paper reviews the environmental record of the transition countries of Eastern Europe and Central Asia since the fall of the Berlin Wall, with a focus on areas of key concern to public policy at the present time. With the impacts of environment on public health being given the highest priority, we examined several associated health indicators at the national level, as well as looking at important environmental issues at the local level. In this respect, we focus on environmental problems related to air and water quality, land contamination, and solid waste management. Despite showing a highly differentiated performance across the region, the results suggest that inadequate environmental management seen in several of the transition countries in the past 20 years has put people’s health and livelihood under huge threats. Moreover, this paper looks at the development of policy responses and resources, i.e. environmental expenditures, in these countries, during the process of transiting from centrally planned economies to market-based one. Similarly, we identify various degrees of progress across the region. The findings reinforce the need for better coherence between national environmental expenditure and international environmental assistance, as well as the actual enforcement of national regulations and international agreements in those non-EU transition countries.
    Keywords: transition countries; environmental issues; public health; land contamination; air pollution; water pollution; policy; environmental expenditure
    Date: 2009
  6. By: Kroll, Henning
    Abstract: --
    Date: 2009
  7. By: John Beirne (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Martin Bijsterbosch (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.)
    Abstract: This paper provides estimates of the exchange rate pass-through (ERPT) to consumer prices for nine central and eastern European EU Member States. Using a five-variate cointegrated VAR (vector autoregression) for each country and impulse responses derived from the VECM (vector error correction model), we show that ERPT to consumer prices averages about 0.6 using the cointegrated VAR and 0.5 using the impulse responses. We also find that the ERPT seems to be higher for countries that have adopted some form of fixed exchange rate regime. These results are robust to alternative normalisation of the VAR and alternative ordering of the impulse responses. JEL Classification: E31, F31.
    Keywords: exchange rate pass-through, inflation, central and eastern Europe.
    Date: 2009–12
  8. By: Sheila Marnie; Leonardo Menchini; Luca Tiberti
    Abstract: After two decades of transition the countries of Central and Eastern Europe and the Commonwealth of Independent States face an increasingly diverse mix of old and new policy challenges to improving child well-being and realizing children’s rights. While attempts have been made to reflect these challenges and diversities by constructing indices of child wellbeing, which measure and rank overall performance by individual countries, this paper proposes a simplified approach which examines five different dimensions of child wellbeing separately, using several indicators for each dimension which allow cross-country comparison. The dimensions included in the analysis are income, health, education, housing and deprivation of parental up-bringing. The results highlight a divergence of child well-being priorities in the selected dimensions for the different countries and for different age groups of children. The analysis shows that in the 2000-2008 period the situation of children improved in absolute terms in almost all dimensions in all countries, but that government interventions still face difficulties in reaching all children, and that across the region there are increasing differences in the character of problems facing the more vulnerable sections of the child population. The discussion shows that it is difficult to rank countries according to an overall level of child well-being, since performance varies significantly according to the choice of dimension or indicator considered. An overall index cannot therefore capture the open challenges, and indeed may distract policy attention away from them. The approach used in this paper shows that each country faces challenges which can be tackled only if they are monitored and fully understood with clear and meaningful indicators, analyzed individually and in their interaction.
    Keywords: child poverty; child protection; child well-being; education; health; housing; transitional economies;
    JEL: P3 P36
    Date: 2009
  9. By: Robert Shelburne (United Nations Economic Commission for Europe); Claudia Trentini (United Nations Economic Commission for Europe)
    Abstract: The economic and financial crisis of 2007-2009 had a serious impact on the larger European region. For western Europe this was the deepest economic downturn since the Second World War. Given the well-developed safety nets for this region the immediate impact on health is likely to be minor. However the crisis will negatively affect the long-run level of per capita income and has left government fiscal positions’ in a poor state; both of these developments will likely have some minor impact on health outcomes for years to come. The deterioration of government finances also raises a concern that the region’s contribution to global public health through its assistance programs may be negatively impacted. In the coming years, pollution control, including of green house gas emissions, is a major challenge for the region. Providing health care for an aging population is also a fundamental challenge for economies with problematic public finances. Eastern Europe and the European CIS were the most severely affected regions of the world. Despite the large economic downturns in these economies, this crisis was still not as great as that that occurred during the 1990s with their transition from planned economies to market economies. Although significant progress has been made in establishing social safety nets and public health programs in these countries over the last decade, these remain inadequate and as a result this economic crisis is likely to have a noticeable negative impact on public health throughout eastern Europe and the CIS. Even before the current economic downturn, there were a number of significant health concerns for eastern Europe and the CIS that were continuing to deteriorate which could have been significantly improved with realistic levels of public expenditures and the implementation of proper policies. The health care systems (often enterprise-based) and institutions collapsed during the transition due to the breakup of the economic and political systems and even the countries themselves (i.e., the Soviet Union and Yugoslavia). The poor health outcomes for the region are due to the fact that a number of diseases and social behaviors became established during the turmoil of the 1990s transition and did not recede as prosperity retuned after 2000. The increase in inequality that developed during the transition is reflected in growing inequalities for access to health care and in health care outcomes. Today, the region is characterized (relative to other regions with similar levels of income) by its high death rates from noncommunicable diseases. The issues of alcoholism and traffic fatalities are highlighted in this paper. For communicable diseases, the European CIS are central in the global fight against TB and HIV/AIDS.
    Keywords: health systems, economic crisis, transition economies, CIS, Russia, HIV, AIDS, Tuberculosis, road safety, pollution
    JEL: I10 I12 I18 P20 P27 P29
    Date: 2009–11
  10. By: Laosethakul, Kittipong (John F. Welch College of Business, Sacred Heart University)
    Abstract: It is believed that the perception that computing is a male domain has discouraged American women to participate in computing fields. Like the U.S., computing is also dominated by men in China. However, unlike the U.S., information technology is ranked the highest compared with other industries in term of career choices for Chinese female university graduates. This study investigates how computer anxiety and computer self-efficacy influence gender perception toward computing of Chinese female in comparison to American female. One of the findings indicated computer anxiety directly impacts gender perception toward computing of females in both cultures.
    Keywords: Gender Perception, IT, Computer Self-efficacy, Computer Anxiety, China
    JEL: J16 Z00
    Date: 2009–12
  11. By: Thomas Scheiber (Oesterreichische Nationalbank, Foreign Research Division, Otto-Wagner-Platz 3, POB 61, A-1011 Vienna); Helmut Stix (Oesterreichische Nationalbank, Economic Studies Division, Otto-Wagner-Platz 3, POB 61, A-1011 Vienna)
    Abstract: We present new evidence on de facto euroization in eleven Central, Eastern and Southeastern European countries. Estimates of the extent of foreign currency cash holdings are derived from survey data. Furthermore, we define overall euroization indices, relating both assets and cash holdings. Results confirm that some countries are heavily euroized and that euro cash holdings constitute a sizeable share of local currency in circulation. Euroization levels in other –mainly Central European– countries are low and economically insignificant. Evidently, high euroization bears various significant consequences for economic policies. Therefore, we inquire on the determinants of euroization. We find that euroization is highly correlated with the quality of past economic governance, reflecting past periods of instabilities. In contrast, the more recent –pre-financial crisis– course of economic history had only limited impact. Thus, our results are in line with the view that policy makers in highly euroized countries are severely constrained by past events and that euroization levels might be difficult to revert through stable macroeconomic policies.
    Keywords: Dollarization, Euroization, Currency Substitution, Survey Data, Central,Eastern, Southeastern, Europe, CEE, SEE
    JEL: E41 E50 D14
    Date: 2009–11–27
  12. By: Jingliang Xiao; Glyn Wittwer
    Abstract: We use a dynamic CGE model of China with a financial module and sectoral detail to examine the real and nominal impacts of a nominal exchange rate appreciation alone, fiscal policy alone and a combined fiscal and monetary package to redress China's external imbalance. The exchange rate policy alone is ineffective in both the short run and long run at reducing China's current account surplus. Fiscal policy is less effective than a combination of fiscal and monetary policy in reducing the surplus.
    Keywords: dynamic financial CGE, foreign reserves, trade surplus, monetary policy, fiscal policy
    JEL: D58 E52 E62 F31
    Date: 2009–11
  13. By: Luigi Bonatti; Andrea Fracasso
    Abstract: This work presents a two-country two-stage growth model capturing the special relationship that has emerged in recent years between the US and China (the so-called BWII regime described by Dooley et al., 2003). The Chinese authorities maintain a competitive (i.e., undervalued) exchange rate in order to sustain the high-productive exporting sectors, foster growth and absorb the large amount of rural workers into the industrial sector. Thus, China runs current account surpluses against the US and accumulates US assets in the form of foreign reserves. The US policy-makers are supposedly more concerned with keeping high the consumption possibilities of the population and exploit the Chinese willingness to finance the US external deficits. We consider three scenarios for the future state of the Sino-American co-dependency. All the scenarios share phase 1, resembling what has actually occurred in recent years, but differ in accordance with what fiscal policy the Chinese authorities adopt, and whether and when China fully liberalizes its capital account and floats the currency (thus starting phase 2). Scenario A is quite optimistic because the Chinese fiscal policy is effective in partially substituting the mercantilist policy undertaken in phase 1 as a fundamental source of demand for tradables and as an engine of growth. Scenario B emphasizes the risks for China of abandoning too early the peg of the exchange rate. Finally, Scenario C shows that a Chinese continuation of the current export-led growth strategy can be economically feasible and lead to the mobilization of the Chinese manpower into the advanced sectors of the economy.
    Keywords: Bretton Woods II, growth, global imbalances, regime switch
    JEL: E42 F33 F41 F43
    Date: 2009
  14. By: Claus Michelsen; Dominik Weiß
    Abstract: The paper analyses the development of the East German housing market after the reunification of the former German Democratic Republic and the Federal Republic of Germany in 1990. We analyse the dynamics of the East German housing market within the framework of the well-known stock-flow model, proposed by DiPasquale and Wheaton. We show that the today observable disequilibrium to a large extend is caused by post-unification housing policy and its strong fiscal incentives to invest into the housing stock. Moreover, in line with the stylized empirical facts, we show that ‘hidden reserves’ of the housing market were reactivated since the economy of East Germany became market organized. Since initial undersupply was overcome faster than politicians expected, the implemented fiscal stimuli were too strong. In contrast to the widespread opinion that outward migration caused the observable vacancies, this paper shows that not weakness of demand but supply side policies caused the observable disequilibrium.
    Keywords: housing market transition, housing subsidies, housing supply, East Germany
    JEL: D5 H2 R21 R31
    Date: 2009–12
  15. By: Mikolaj Szoltysek (Max Planck Institute for Demographic Research, Rostock, Germany); Barbara Zuber Goldstein (Max Planck Institute for Demographic Research, Rostock, Germany)
    Abstract: In 1940, almost two years into World War II, the book, “Agrarverfassung und Bevölkerung in Litauen und Weißrussland”(Agrarian constitution and population in Lithuania and Belarus), was published. The habilitation thesis of the young German historian Werner Conze, the book was an extensive study of premodern family patterns of the peasant serf population in Lithuania from the 16th to the 18th centuries. In an approach that was innovative for its time, Conze used a type of historical source which, up to that point, had not yet received a lot of interest, namely, quantitative data derived from original inventory lists of historic estates. The analysis of the data led Conze to detect a difference between West and East. The comparison emphasised the cultural divide between the Germans and the Slavs to the East by postulating smaller family sizes throughout the western or German-influenced part of historic Lithuania, and larger families with more complex structures throughout the Slavic parts of the country. Thus, Conze also suggested that population growth in the Lithuanian west had been restrained, while the Lithuanian east had experienced abundant population growth. Conze’s scientific insights remain present in today’s historical-demographic literature, and have become an essential building block of any argument in support of the validity and persistence of East-West differentials in family systems in East-Central Europe. Because of this study’s continued importance, it may prove useful to re-examine “Agrarverfassung und Bevölkerung,” looking at its auctorial and ideological context, its methodological procedures, and its empirical content. Our critical assessment of some of Conze’s basic assumptions reveals serious shortcomings in his analysis, which resulted from his tendency to make unwarranted inferences from non-representative and circumstantial evidence, and from his underlying motivation to search for German-Slavic differences. We will discuss the extent to which the pervading notion of the East-West divide in historical East-Central Europe must be revised in response to these shortcomings. By uncovering the inadequacies of Conze’s contribution, we hope to pave the way for a truly scientific understanding of familial characteristics of Eastern Europe, and to end the perpetuation of certain stereotypes of Slavic populations.
    Keywords: Belarus, Germany, Lithuania, demographers, family forms, historical demography
    JEL: J1 Z0
    Date: 2009–12
  16. By: Korosteleva, J; Lawson, Colin
    Abstract: The present paper examines the financial development of Belarus, with special emphasis on 1996-2002, when the financial sector was restrained by pervasive government controls. Belarus is of particular interest, as, despite no economic restructuring, annual growth has averaged seven per cent since 1997. It has been argued that monetary stimulation of investment activity through interest rate ceilings, directed credit and preferential loans revived growth. This article investigates whether a repressive financial policy, adopted by the authorities in the late 1990s, led to financial deepening and increased the share of savings allocated to investment.
    Keywords: financial repression; financial sector; financial depth
    Date: 2009

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